Dog Bites and Insurance - The Science of Fear (Part 5 of 8)

This is part 5 of a series I’m doing centered around the book the Science of Fear by Daniel Gardner. Today, I’m not going to talk specifically about the book, but about an example that pulls a lot of the pieces together in the first part of the book that I discussed last week.

 

A couple of weeks ago, the Insurance Information Institute issued a press release – and the first line of the release read: “Man’s best friend is sinking its teeth into homeowners insurance costs. Dog bites account for one-third of all homeowners insurance liability claims…”. The fairly short release goes on to report that the number of claims have gone up 9% from 2007 to 2008 and how the average cost per claim has gone up 28% since 2003.

 

Dozens of media outlets picked up on the story – with all of them focusing on these key statistics.

 

Now interestingly, in spite of the 9% increase in claims from 2007 to 2008, the number of total claims is actually down 6.5% from the 2003 numbers. Meanwhile, while the costs of the average claim have gone up over the past 6 years, the average claim costs have actually gone up each year LESS than the average of medical costs in this country - which have been rising at around 8.7% a year over the past decade (this would calculate out at about 65% since 2003 -- more than double the rate of increase for dog bites). 

 

So the headline could be that the number of claims are down and the cost of the claims are going up less than the price of all medical costs.

 

But this isn’t the route that the Insurance Information Institute (who would have a vested interest in pumping up these numbers) or the media (who has a vest interest in creating fear) chose to go with this information. They reported all of the bad news…but without putting it in the perspective by reporting the good.

 

Meanwhile, it is also interesting to see the focus on one-third of all homeowners liability claims are from dog bites.  While technically true, the sin of omission is present here as well. The reality is that liability claims make up a very tiny portion of overall claims – at only 6% of all total claims. Thus, while dog bites make up 33% of all LIABILITY claims (true), they make up only 2% of all claims -- something that wasn't reported.

 

Meanwhile, 37% of the US Households own dogs – the equivalent of 43 million homes.  Out of those homes, only .03% (that’s 1 out of every 3,000) of the nation’s 43 million dog owning households had a liability insurance claim last year.

 

So:

 

1)   The VAST majority of dogs (2,999 out of every 3,000) are owned safely by their owners,

2)   The number of dogs that are responsible for liability claims is going down (in spite of the number of dogs being owned increasing),

3)   The dollar amount of insurance claims for dog bites are trailing overall cost increases for health care.

 

And yet, that wasn’t even close to the headline.

 

It’s just interesting to see a press release from a group with a financial interest in creating fear, picked up by the media almost as-is without looking up any of the other information, that when most people read their Gut will follow the Example Rule and say, wow, that seems about right, because I know or read about someone recently who was bitten by a dog, and the media, completely avoiding the denominator, runs the story without putting the overall risk into perspective.

Yeah, it happens every day in all areas of the news – particularly in dog bites. We must be smart about how we analyze the information we consume so we can weed through it and come up with smart, rational conclusions on our own. Too often we don’t.

Comments

[MichelleD]

The problem is no one has time to put this much effort into analysis and fact checking of their news. Not everyone has a wife as loving and patient as you do to put up with the countless hours you spend combing thru these things. :-)

Sometimes the stories spill the beans themselves by providing numbers that contridict their headlines. We could spend time/effort trying to educate the GP on why they can't believe everything they read. However, I believe in the interest of self preservation JOURNALISTS need to step up and start policing themselves. Newspapers are dying because people aren't willing to pay for shitty news reporting when they can get the same shitty reporting on the internets for free. This is a press release. But instead of doing any investigative reporting its recopied verbatim as "news".